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FOURTH AMENDED AND RESTATED PROMISSORY NOTE
$700,000 Suffolk County, New York As of December 2, 2008
FOR VALUE RECEIVED, HAUPPAUGE COMPUTER WORKS, INC., a New York
corporation (the “Borrower”), HEREBY PROMISES TO PAY to
the order of JPMORGAN CHASE BANK, N.A. (the “Bank”), at
its offices located at 395 North Service Road, Melville,
New York 11747, or at such other place as the Bank or any
holder hereof may from time to time designate, the principal sum of
SEVEN HUNDRED THOUSAND DOLLARS ($700,000), or such lesser amount of
all advances made by the Bank pursuant to the uncommitted line of
credit available to the Borrower pursuant to the Line Letter (as
hereinafter defined), in lawful money of the United States, on
March 31, 2009 or earlier as hereinafter referred to, and to pay
interest in like money at such office or place from the date hereof
on the unpaid principal balance of each Loan (as hereinafter
defined) at the Eurodollar Rate or the Prime Rate (as hereinafter
defined and provided for in the following paragraph) per annum,
which shall be payable at the end of each Interest Period (as
hereinafter defined) until such Loan(s) shall be due and payable
(whether at maturity, by acceleration or otherwise) and thereafter,
on demand. Interest after maturity shall be payable at a
rate three percent (3%) per annum above the Bank's Prime Rate
which rate shall be computed for actual number of days elapsed on
the basis of a 360-day year and shall be adjusted as of the date of
each such change, but in no event higher than the maximum permitted
under applicable law. “Prime Rate” shall
mean the rate of interest as is publicly announced at the Bank's
principal office from time to time as its Prime Rate.
The Borrower shall give the Bank irrevocable written notice (or
telephonic notice promptly confirmed in writing) not later than
11:00 a.m., New York, New York time, three Business Days prior to
the date of each proposed Eurodollar Loan (as hereinafter defined)
or prior to 11:00 a.m. New York, New York time on the date of each
proposed Prime Loan (as hereinafter defined). Such
notice shall be irrevocable and shall specify (i) the amount and
whether the proposed borrowing shall be a Eurodollar Loan or a
Prime Rate Loan, (ii) the initial Interest Period if a Eurodollar
Loan, and (iv) the proposed date of borrowing. Each
borrowing of a Eurodollar Loan shall be in an amount not less than
$500,000 or, if greater, whole multiples of $100,000 in excess
thereof. The Bank is authorized to enter on the Grid
Schedule attached hereto (i) the amount of each loan made from
time to time hereunder (the “Loan”), (ii) the date
on which each Loan is made, (iii) the date on which each Loan
shall be due and payable to the Bank, which date shall be March 31,
2009 (“Maturity Date”), (iv) the applicable
interest rate to be paid on each Loan which shall, at the
Borrower's option in accordance herewith, be at (a) the
Adjusted Eurodollar Rate plus one and 85/100 percent (1.85%) (the
“Eurodollar Rate”) or (b) the Prime Rate minus one
percent (1.0%) (such Loans, the “Eurodollar Loan” or
the “Prime Loan”), (v) the amount of each payment
made hereunder, and (vi) the outstanding principal balance of
the Loans hereunder from time to time, all of which entries, in the
absence of manifest error, shall be conclusive and binding on the
Borrower; provided, however, that the failure of the Bank to make
any such entries shall not relieve the Borrower from its obligation
to pay any amount due hereunder.
Uncommitted Line of Credit
The Bank has approved an uncommitted line of credit to the Borrower
in the principal amount not to exceed the face amount of this Note.
The execution and delivery of this Note and the acceptance by the
Bank of this Note shall not be deemed or construed to create any
contractual commitment to lend by the Bank to the
Borrower. The obligations under this Note represent
reimbursement obligations of the Borrower with respect to one or
more letters of credit issued by the Bank for the benefit of the
Borrower. This Note evidences the Borrower’s
obligations to repay such amounts. The aggregate
outstanding principal amount of debt evidenced by this Note is the
amount so reflected from time to time in the records of the
Bank.
Prepayment
(a) No
prepayments shall be permitted hereunder on any Loan while the
Eurodollar Rate shall be applicable to such Loan on any date other
than the last day of the applicable Interest Period. A
Loan may be prepaid at any time while the Prime Rate shall be
applicable to such Loan upon two days prior notice.
(b) The
Borrower shall reimburse the Bank on demand for any loss incurred
or to be incurred by it in the reemployment of funds released by
any prepayment of the Loan made in contravention of the terms
hereof. Such loss shall be the difference as reasonably
determined by the Bank between the cost of obtaining the funds for
the Loan and any lesser amount which may be realized by the Bank in
reemploying the funds received in prepayment during the period from
the date of prepayment to the end of the current Interest Period of
such Loan.
Increased Costs
If at any time after the date hereof, the Board of Governors of the
Federal Reserve System or any political subdivision of the United
States of America or any other government, governmental agency or
central bank shall impose or modify any reserve or capital
requirement on or in respect of loans made by or deposits with the
Bank or shall impose on the Bank any other conditions affecting
Eurodollar Loans, and the result of the foregoing is to increase
the cost to (or, in the case of Regulation D, to impose a cost on
the Bank of making or maintaining any Eurodollar Loans or to reduce
the amount of any sum receivable by the Bank in respect thereof, by
an amount deemed by the Bank to be material, then, within 30 days
after notice and demand by the Bank, the Borrower shall pay to the
Bank such additional amounts as will compensate the Bank for such
increased cost or reduction; provided, that the Borrower shall not
be obligated to compensate the Bank for any increased cost
resulting from the application of Regulation D as required by the
definitions of Adjusted Eurodollar Rate. Any such
obligation by the Borrower to the Bank shall not be due and owing
until the Bank has delivered written notice to the
Borrower. Failure by the Bank to provide such notice
shall not be deemed a waiver of any of its rights
hereunder. A certificate of the Bank claiming
compensation hereunder and setting forth the additional amounts to
be paid to it hereunder and the method by which such amounts were
calculated shall be conclusive in the absence of manifest
error.
Indemnity
The Borrower shall indemnify the Bank against any net loss or
expense which the Bank may sustain or incur as a consequence of the
occurrence of any default hereunder or any loss or reasonable
expense sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain any Eurodollar
Loan or any part thereof which the Bank may sustain or incur as a
consequence of any default in payment of the principal amount of
the Loan or any part thereof or interest accrued
thereon. The Bank shall provide to the Borrower a
statement, supported where applicable by documentary evidence,
explaining the amount of any such loss or expense, which statement
shall be conclusive absent manifest error.
Change In Legality
(a) Notwithstanding
anything to the contrary contained elsewhere in this Note, if any
change after the date hereof in any law or regulation or in the
interpretation thereof by any governmental authority charged with
the administration thereof shall make it unlawful (based on the
opinion of any counsel, whether in-house, special or general, for
the Bank) for the Bank to make or maintain any Eurodollar Loan or
to give effect to its obligations as contemplated hereby with
respect to any Eurodollar Loan, then, by written notice to the
Borrower by the Bank, the Bank may require that all outstanding
Eurodollar Loans made hereunder be converted to Prime Loans,
whereupon all such Eurodollar Loans shall be automatically
converted to Prime Loans as of the effective date of such notice as
provided in paragraph (b) below.
(b) For
purposes of this Section, a notice to the Borrower by the Bank
pursuant to paragraph (a) above shall be effective, if lawful and
if any Eurodollar Loans shall then be outstanding, on the last day
of the then current Interest Period; otherwise, such notice shall
be effective on the date of receipt by the Borrower.
Events of Default.
If the Borrower shall default in the punctual payment of any sum
payable with respect to, or in the observance or performance of any
of the terms and conditions of this Note, or any other agreement
with or in favor of the Bank, or if a default or event of default
that is accelerated shall occur for any reason under any such
agreement, or in the event of default in any other material
indebtedness of the Borrower exceeding $25,000 in the aggregate, or
if any warranty, representat
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